Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms
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Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms
UNSGSA furthering diverse development goals and influence critical aspects of the G20 financial inclusion agenda
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How the finance sector can drive Africa’s economic growth

How the finance sector can drive Africa’s economic growth | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it
The rise of Africa’s financial services sector in recent years has been remarkable. From a relatively underexplored and underinvested sector a mere decade ago, today, this sector is considered to be one of the continent’s brightest prospects. This is due to the fact that financial sector development has been on the agenda of African policymakers for some time now as (aside from profitable opportunities for investors) continued development of this sector has the potential to transform the lives of millions of people across the continent. For instance, access to credit by the SME/the more informal businesses has the ability to provide jobs, create safety networks and, ultimately play a role in reducing poverty.

With this in mind, various policy reforms over the past decade have contributed to an environment more conducive to financial sector development and, where Governments have made progress in introducing much needed regulatory frameworks, information systems and regulatory institutions – all aimed at enabling and facilitating further development of this sector.

The transformation, however, is not something that will happen overnight, in a week, a month or a year. And, while most African countries still lag behind the rest of the world in the adoption of banking and insurance products, this creates substantial scope for continued future development. Thus offering profitable opportunities for investors who are willing to take on some risk and are innovative – as their success will depend of their ability to devise new products, or new ways to deliver their product offering that suits the nature of both the targeted markets and consumers therein, across the African continent.

To scope the current state of the FS sector in Africa, below I have outlined highlights for the banking and insurance industries in these sectors, alike.

Accounting for Africa’s ‘unbanked’ population

The banking sectors of a number of sub-Saharan African (SSA) countries have exhibited significant growth in recent years.

One of the contributing factors in this regard pertains to the rapid rise of pan-African banks. Banking industries across SSA are highly concentrated, with the top four banks usually accounting for the majority of total banking sector assets within a particular country. The growing presence of subsidiaries of major global banks on the continent will ultimately improve the availability and quality of financial services in recent years; however, the focus here has largely, but not exclusively, been on high margin corporate businesses as opposed to the growing retail including financial inclusion for lower income households and the ‘unbanked’ sectors of economies. Presently, the international banks with the largest footprints across Africa originate mostly from the United Kingdom (UK), France and the United States.

Added to these subsidiaries, large banks from well-developed financial markets on the African continent have in fact made the biggest impact. As a result, financial sectors across the continent stand to benefit from gains in efficiency, innovation and financial deepening. Some of the larger African banks include; Ecobank (with its roots in Togo) that has the biggest presence in Africa and rendering banking services in 32 countries by 2013, the United Bank for Africa (domiciled in Nigeria) that operates in 19 countries across Africa, Standard Bank who has a comprehensive presence within 18 African countries and, Barclays Africa Group that delivered banking services in 10 African countries by 2013 including through the Absa brand in South Africa.

Despite strong banking sector growth, however, a large proportion of the African populace still does not make use of formal financial services. The fact that the reach of commercial banks – in terms of branches and ATMs as a proportion of the population – remains well below global averages is certainly not helpful in this regard.

That said, commercial bank branches and ATMs are costly and most efficient in areas with high population density and are thus not really suited to serve the large ‘unbanked’ populations – which are widely dispersed over large areas. To bridge this gap, banks operating on the continent have started to explore alternative operating models, including mobile and online banking, mobile branches and using third-party agents, such as supermarkets and/or post offices, etc. wherever accessible and appropriate.

Reassuring (future) penetration in African insurance markets

The insurance market in Africa on the other hand is under-developed as – apart from South Africa, Namibia, and Mauritius – all countries have very low penetration ratios. According to Swiss Re, the total value of Africa’s insurance premiums was just shy of $70bn in 2013, down 2% from the $71.35bn in 2012. This means that Africa’s share in the global market was only 1.5%. The poor performance of Africa on a global stage is particularly noticeable if South Africa is excluded, as South Africa accounted for nearly 74% ($51.6bn) of all African insurance premiums in 2013, with the other 53 countries contributing $18.3bn, which is then only 0.4% of the global insurance market.

Low insurance penetration in Africa is mainly because most of a lack of awareness and the fact that most Africans are still too poor to afford insurance. Typically, access to insurance only starts to increase quickly in the upper middle income brackets, but with most Africans still just struggling to meet their basic food and other day-to-day needs, insurance is still a long way off for the majority of Africans. It’s for this – according to an article by Imara – that insurance companies in Africa traditionally target only the richest 5% of the adult population. Even in South Africa, which has a well-developed insurance market, less than 30% of low-income adults have insurance.

Additionally, other key determinants of an insurance sector in any particular country are income levels, political stability, the depth and sophistication of the financial sector, the level and volatility of inflation, culture, and the capacity of companies to innovate.

Africa’s insurance markets, however, are gradually changing. A few African countries already have fairly high income levels and therefore sizable middle classes, which is spurring the development of insurance, and the most recent growth in the volume of insurance premiums in Africa has been among the highest in the world over the past few years.

Africa’s ‘uninsured’ or underserved insurance markets present a burgeoning of opportunities for not only large foreign and African insurance companies, alike, but also for micro-insurers to sell low-cost products to the lower income bracket. Additionally, the advent of mobile money has also brought a new dimension to Africa’s insurance industry, where buying insurance on a mobile phone is an exciting growth area as it offers a more affordable way for Africans, especially in remote regions, to gain access to insurance products. The successful rollout of such products or services, however, does require the cooperation of telecommunications companies, banks, and insurance companies.

Overall, the non-life segment will continue to dominate in the short term, however, as Africans’ incomes grow and consumers become more financially savvy, there will be more and more opportunities in the life segment as well.

Historically, the main reason for the low level of financial inclusion on the continent pertains to low income levels in general. And, the second most significant barrier to the use of formal financial services relates to the distance that needs to be travelled so as to access such services.

However, with rising incomes and a rapidly growing middle class, an increasing number of financial institutions have woken up to the massive potential that lies within Africa’s one-billion-plus consumer base. These financial institutions have also been spurred to reconsider the way in which they do business and embrace innovative strategies so as to – go beyond the realm of ‘traditional banking products’ per se and – shape products to fit African consumers’ rising financial sophistication needs.

Should banks be able to tap into the large ‘under/unbanked’ and ‘uninsured’ populations across the continent, it could lead to a significant increase in new deposits and premiums, respectively. Also, even at lower profit margins, the benefits associated with leveraging economies of scale should contribute to returns on the bottom line. So, while not without challenges, Africa’s financial services sector presents compelling investment opportunities.
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UK banks investigating Fifa corruption

UK banks investigating Fifa corruption | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it
A trio of British banks have launched internal reviews of transactions linked to the alleged corrupt payments by Fifa officials outlined by American investigators in the wake of last week’s swoop on football’s world governing body.

The banks - Standard Chartered, Barclays and HSBC - are understood to be looking into the details of payments worth hundreds of thousands of dollars after they were cited in the 164-page indictment put forward by US prosecutors following the arrest of seven officials in Zurich.

The allegedly suspect transactions included a $500,000 (£326,000) payment sent from a sports marketing company’s bank in New York to be credited to the account of a luxury yacht maker held by HSBC in London.

The three British banks are not accused of any wrongdoing and are are among dozens named in the FBI indictment. The reviews are in part to ensure that they have complied with anti-money laundering and bribery rules.

In a statement, Standard Chartered said: “We are aware that two payments cleared by Standard Chartered are mentioned in the indictment. We are looking into those payments.”

Neither Barclays nor HSBC commented on the issue.

The Fifa bigwigs facing charges
1 of 14

Jeffrey Webb, 50, Cayman Iskands

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Jeffrey Webb, 50, Cayman Iskands
Costas Takkas, 58, UK
Jack Warner, 72, (pictured), Daryan Warner, 46 and Daryll Warner, 40, Trinidad & Tobago
Charles Blazer, 70, USA
Rafael Esquivel, 68, Venezuela
Eugenio Figueredo, 83, USA/Uruguay
Nicolas Leoz, 86, Paraguay
Eduardo Li, 56, Costa Rica
José Maria Marin, 83, Brazil
Julio Rocha, 64, Nicaragua
José Hawilla, 71, Brazil
Aaron Davidson, 44, USA
Alejandro Burzaco, 50, (pictured), Hugo Jinkis, 70 and Mariano Jinkis, 40, Argentina
José Margulies (AKA José Lazaro), 75, Brazil

Any suggestion that the global networks of the major banks have been used to facilitate illicit wire transfers will be a source of concern to executives after a series of swingeing fines imposed by US regulators. HSBC and Standard Chartered have been hit by penalties totalling $3bn between them in the last three years for infringements relating to inadvertently facilitating money laundering or breaching sanctions.

The bank reviews came as senior figures in British football and politics stepped up calls for the consideration of a boycott of future World Cups to force Fifa president Sepp Blatter from office.

The Swiss-born football supremo, who was re-elected to office for a fifth term on Friday despite the clamour following the arrest of officials for alleged corruption amounting to $150m, has complained that he had been shown “zero respect” in recent days.

It was reported that Mr Blatter, 79, is set to be questioned by the Swiss authorities as part of an investigation into the awarding in 2010 of the next two World Cups to Russia and Qatar respectively. The office of the Swiss attorney general denied that the Fifa president faced an “immediate” interview but acknowledged he could be questioned in the future.
Read more: Could blatter face arrest?
Blatter 'to be questioned' by swiss authorities in corruption probe
Welcome to the Seppocracy where Fifa is a joke

Greg Dyke, chairman of the Football Association, said a boycott would need the support of at least ten major footballing nations - potentially including the Netherlands and Germany - to be effective. He added that a stand-alone protest by England would be “pointless”.

Uefa president Michel Platini is under pressure to make good on his threat to campaign for a collective boycott of the 2018 World Cup in Russia when European football’s governing body meets in Berlin this week. Such a move could threaten schism within Uefa after suggestions that up to a third of its members, including France and Spain, voted for Mr Blatter last week.

On Friday Mr Blatter was re-elected for a fifth term (Getty) On Friday Mr Blatter was re-elected for a fifth term (Getty)
Mr Dyke told BBC Radio 5 Live: “There would certainly be us, there would certainly be the Dutch, there would certainly be the Germans, who have been demanding change and would demand change. They would only take serious action if there’s enough [opponents of Mr Blatter willing to act].”

The threat of a boycott was backed by Culture Secretary John Whittingdale, who told the Sunday Times that “no options should be ruled out” in efforts to secure the Fifa president’s resignation.

Labour leadership candidate Andy Burnham went further and said the English FA should take a tougher stance and announce unilaterally that it will stay away from the 2018 tournament.

He said: “I personally believe there is a pretty overwhelming case for England taking a stand and saying that we should not participate in the next World Cup given the current appalling state of Fifa.”

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Global Policy Forum 2015 Inspiring innovation to advance financial inclusion | Mozambique

Global Policy Forum 2015 Inspiring innovation to advance financial inclusion | Mozambique | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it
Banco de Moçambique and the Alliance for Financial Inclusion are pleased to announce that this year’s AFI Global Policy Forum (GPF) will take place from 1-4 September 2015 in Maputo, Mozambique.

The Forum will be held at the Joaquin Chissano International Conference Center, overlooking the beautiful Maputo Bay, just minutes away from the event’s official hotels.

The GPF was created as a platform for central banks and other financial sector policymaking and regulatory institutions in developing and emerging countries to engage in dialogue and share experiences in increasing access to financial services with their peers and other stakeholders. The GPF is the largest and most significant annual meeting of financial inclusion policymakers.

We would like to ask you to save the date, 1-4 September 2015, and to make sure not to miss the opportunity to take part in the world’s most important forum on financial inclusion. We look forward to welcoming you in Maputo!

Further details on this year’s theme, program, and logistics summary will be updated regularly.

Download
AFI Save the Date in English, Spanish, French and Portugue
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Consumer Empowerment and Market Conduct

Consumer Empowerment and Market Conduct | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it

Consumer empowerment and market conduct are vital issues for vulnerable and low-income consumers.

Consumer empowerment and market conduct are particularly important issues for vulnerable and low-income consumers. Efforts to strengthen effective protection mechanisms and improve financial literacy and education are considered complementary strategies for improving the financial capability of low-income consumers. Consumer empowerment is an evolving area, however, and covers issues ranging from transparency and disclosure, and responsible lending to redress mechanisms.

There is also the challenge that the standards agreed by developed countries may need to be adapted or tailored to meet the needs of developing and emerging countries, in particular to mitigate against unintended consequences such as increasing the cost of financial service delivery or prohibiting innovations intended to increase financial access.

Click here for information on AFI’s Consumer Empowerment and Market Conduct Working Group (CEMC).

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Financial Inclusion Strategy

Financial Inclusion Strategy | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it

A financial inclusion strategy is a comprehensive framework developed through consultation with the public and private sector to systematically accelerate progress toward full financial inclusion.

Growing evidence makes it abundantly clear that national financial inclusion strategies are now seen as essential by many AFI members in order to have a clear national vision, a widely accepted strategic framework and a robust organizational structure to facilitate the development and implementation of coordinated and sound policy reforms. The Maya Declaration bolstered interest among AFI members in developing and implementing financial inclusion strategies with institutions from more than 20 countries making commitments to develop such strategies. The G20 and its Global Partnership for Financial Inclusion (GPFI) have further supported the development of financial inclusion strategies through the nine "G20 Principles for Innovative Financial Inclusion" endorsed by G20 Leaders in 2010, and the establishment under the Mexican G20 Presidency in 2012 of the G20 Financial Inclusion Peer Learning Program with AFI as an Implementing Partner. A national strategy with clear goals and targets can support coordination among public and private sector stakeholders and provide an organizing framework for financial inclusion policies and regulations to be implemented.

There is considerable variation in how countries have set about developing national strategies. However, generally in the majority of cases there are at least four key stages:

Stage one: Diagnostic phase in which both supply-side and demand-side data are gathered and analysed to obtain  an accurate picture of the current status of financial inclusion;Stage two: Strategy formulation in which common definition and vision may be reached through a process of consultation with both public and private sector stakeholders. The strategy usually would also include a time-bound action plan and targets;Stage three: Strategy Implementation—including the enactment of policy reforms identified in the strategy, the private sector response and usually the creation of a coordinating mechanism such as a National Taskforce or Council to oversee progress;Stage four: Monitoring and Evaluation—tracking of core indicators to determine if the strategy is on track, and the identification of any refinements or additional measures needed to achieve the strategy’s objectives.

AFI has provided grants to a number of its members for preparation of financial inclusion strategies or related activities such as demand-side surveys, diagnostic studies, knowledge exchanges, and national stakeholder workshops. Meanwhile, AFI’s Financial Inclusion Strategy Peer Learning Group (FISPLG) provides a platform for member countries to share experiences in the development and implementation of national strategies as well as to connect members to technical assistance providers, donors and the private sector.

Click here for information on AFI’s Financial Inclusion Strategy Peer Learning Group (FISPLG).

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SME Finance

SME Finance | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it
SME Finance

SMEs are engines of growth and job creation, and they have an important role in poverty alleviation and the raising of living standards in developing and emerging countries.

SMEs play an important role in job creation and poverty alleviation. However, access to finance remains a very significant challenge for SMEs in developing and emerging countries, a situation that in many countries has been exacerbated by the fallout from the global financial crisis.

Central banks and finance ministries have an important role in implementing policy solutions to improve access to finance for SMEs. AFI members therefore established the SME Finance Working Group (SMEFWG) to advance knowledge about the role of access to financial services in the development of small enterprises in the developing world. The SMEFWG will focus on identifying policy frameworks and interventions that enable and improve the sustainability of small enterprises, with particular focus on financial sector policy.

Click here for information on AFI’s SME Finance Working Group (SMEFWG).

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World Bank Whistleblower makes Startling Confession Karen Hudes #N3

Karen Hudes exposes The World Bank. It is one of the world's largest financial institutions said to represent 188 nations from around the world. Its stated purpose ...
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BSP sets July MOU signing of financial inclusion strategy - The Manila Times

BSP sets July MOU signing of financial inclusion strategy - The Manila Times | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it
The central bank will lead the signing in July of a memorandum of understanding among 12 government agencies of the Philippines involved in drafting a national strategy for financial inclusion (NSFI).
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Financial education and women - OECD

Financial education and women - OECD | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it
OECD-INFE Policy guidance on addressing women’s and girls’ needs for financial awareness and education

Endorsed by G20 Leaders at their Summit in September 2013, this policy guidance aims to help address gender differences in financial literacy and to financially empower women and girls. The guidance is complemented by and based on an in-depth publication titled Women and Financial Education: Evidence, Policy Responses and Guidance.

Addressing women's needs for financial education - 250 pixels - shadowAddressing women's needs for financial education

Both women and men need to be sufficiently financially literate to effectively participate in economic activities and to take appropriate financial decisions for themselves and their families, but women often have less financial knowledge and lower access to formal financial products than men. Women therefore have specific and additional financial literacy needs.



This 8-page overview brochure looks at barriers to women’s full financial empowerment, the potential contribution improved financial education can make to their financial well-being and makes recommendations for financial education initiatives targeting women and girls.

Empowering women through financial awareness and education

This working paper reviews the literature on gender differences in financial literacy to better understand their causes and consequences, as well as possible policy responses. In this document, research carried out to collect further evidence and case studies may help countries interested in the development and implementation of financial education programmes targeting women’s most vulnerable sub-groups.

Gender equality in education, employment and entrepreneurship

Prepared as part of the OECD's gender equality initiative, this report on Gender Equality in Education, Employment and Entrepreneurship informs, shares policy experiences and good practices, and helps governments promote gender equality. The report also addresses gender differences in financial literacy and how financial education can contribute to women’s financial empowerment (chapter 2.6).



G20 Declaration supporting gender equality

“We recognize the need for women and youth to gain access to financial services and financial education, ask the GPFI, the OECD/INFE, and the World Bank to identify barriers they may face and call for a progress report to be delivered by the next Summit” - G20 Leaders Declaration, June 2012


The OECD International Network on Financial Education (INFE) gathers institutions from more than 100 countries to develop policy analysis and guidance on key relevant financial education issues.


The OECD/INFE is particularly committed to supporting women’s financial empowerment and the related G20 agenda by providing policy evidence, analysis, and guidance to help policy makers address women’s needs for financial awareness and education.

FURTHER READING

‌‌Closing the Gender Gap: Act Now (2012)

OECD/INFE financial literacy measurement survey (2012)

International Gateway for Financial Education

Wikigender

OECD gender portal



For further information

Please contact:
Ms. Flore-Anne Messy
Tel: +33 1 45249656
Email: flore-anne.messy@oecd.org
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Financial Inclusion Is Essential To Achieve Zero Hunger

Harnessing Financial Education to Spur Entrepreneurship and Innovation.” Video Address by the UNSGSA, H.M Queen Máxima of the Netherlands, at the third .
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Inclusive Finance: How Technology Brings Banking to the Underserved (II)

Technology is driving financial inclusion by enabling populations who have traditionally been excluded from formal financial services to gain access. All over the ...
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Financial Inclusion in Mexico - The MasterCard Center for Inclusive Growth

Financial Inclusion in Mexico - The MasterCard Center for Inclusive Growth | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it
May 5, 2015
Icons_Center_Thumbs36

When the World Economic Forum convenes its sessions on financial inclusion in Mexico this month, its host will be able to boast about some very good news. The Global Findex, a survey

measuring financial inclusion across the world, reveals that Mexico progressed substantially in the past three years, including growth in the top-line indicator: adults with accounts. According to newly released data, the percentage of the Mexican population with an account rose from 27.4 in 2011 to 39.1 percent in 2014, a 44 percent increase in three years.

Even more impressive is the growth among traditionally excluded groups. The percentage of women with accounts grew by 77 percent, nearly closing the gender gap. And participation by the lowest 40 percent of the population and people in rural areas more than doubled (142 and 163 percent growth, respectively).

On nearly every dimension, Mexicans reported more financial activity – use of ATMs and debit cards, electronic receipt of wages and benefits, savings (formal and informal) and borrowing. Especially striking is the number of Mexicans who report saving. Over half the population is saving in some form, up from only a quarter in 2011.

Nevertheless, Mexico still lags many of its peers in the region – behind Brazil, Chile, Venezuela, Uruguay, Ecuador, Bolivia, Costa Rica, Guatemala and Panama. In Latin America as a whole, over half of all adults have an account, well above Mexico’s 39 percent.

Recognizing that they have a long way to go, Mexico’s banking regulators have been leaders in the global financial inclusion movement. In fact, the process by which member countries of the Alliance for Financial Inclusion publish national commitments to financial inclusion – the Maya Declaration – was born in Mexico. And Mexico has already achieved one of its Maya commitments – a banking outlet in every municipality. In fact, Mexico earned fifth place among the 55 countries in the EIU’s Global Microscope ranking of the environment for financial inclusion. Mexico began working on financial inclusion from a low base. Since then, it’s been doing a lot of things right, and the results are starting to show.

FinancialInclushion_Mex_1

Author:
Elisabeth Rhyne, Managing Director,
Center for Financial Inclusion at Accion
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Mobile Phones Are Revolutionizing Personal Finance In Sub-Saharan Africa

Mobile Phones Are Revolutionizing Personal Finance In Sub-Saharan Africa | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it
Until a few years ago, three-quarters of people in sub-Saharan Africa were cut off from the financial system. They had no relationship with a bank, making it difficult to send and receive money, or...
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5 things to know about building business in Africa

5 things to know about building business in Africa | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it
Corporate and investor interest in Africa commands the attention of the highest echelons of global business. The theme of the 2015 World Economic Forum on Africa, Then and Now: Reimagining Africa’s Future, has my fellow delegates and me reflecting upon our continent’s remarkable turnaround.

Over the past decade and a half alone, Africa’s economy has grown nearly three percentage points faster than global GDP. Fuelled by an influx of Foreign Direct Investment (FDI), rapid urbanisation and an emerging middle class, African countries – including Mozambique, Zambia and Ethiopia – are forecasted to grow at a faster rate than many other emerging economies in the next five years. It’s no wonder then, that Africa sits at the forefront of many corporate growth strategies.

We see this with our own global corporate clients, who are eager to increase their presence in Africa, and tap into the resources and opportunities. Yet issues related to infrastructure, urbanization, accessibility, transparency and political unrest have challenged corporate entry in the past. While these have been improving over the last few decades, investors and corporates alike remain cautious as they explore options in Africa.

Ahead of the Africa meeting, JLL released a report to highlight market fundamentals that businesses must consider when developing their real estate footprint in Africa.

Align with the middle class… and young people

Urbanisation and Africa’s emerging middle class are critical drivers of growth. At least 370 million Africans (or 34% of the continent’s total population), are now considered middle class, according to the African Development Bank. While the definition of middle class remains relative, it’s clear that this dominating demographic exists largely in cities: the number of African cities with a population over 5 million is expected to more than double from seven in 2015 to 17 in 2030. And, international corporations are increasingly congregating in the hubs that attract this educated, working-age population.

Important to note is that this population is young and rapidly growing in size. Already representing the world’s largest youth demographic, Africa’s working-age population is expected to double to 1 billion in the next 25 years, surpassing both China and India.

Influx of FDI

Africa’s share of global FDI has soared from 8% in 2013 to 17% in 2014. While Asia Pacific still accounts for the majority of FDI inflows, Africa is the only region in the world to see significant growth in its share of global FDI flows since 2003 – more than doubling from $62.5 billion to $128 billion in 2014.

Back in the early 2000s, mining, oil and gas accounted for over 60% of this FDI. But by 2014, this fell to 17% as other sectors surpassed the extractive industries, most notably, manufacturing.

More than mining: now service sectors and manufacturing

Oil and gas remain a significant focus in Africa for overseas investors, but business services now top the FDI sector list, followed by manufacturing and sales, marketing and support industries. Retail and construction also feature in the top ten, and both have seen a surge in response to the demands from to rapid urbanization and consumer spending.

Explore fin tech

Mobile phone penetration and mobile banking are creating pockets of technological excellence and expertise, with Nairobi emerging as a driving force in this area. Elsewhere, Accra’s ICT (information communications technology) sector is strong, while Addis Ababa is emerging as a hub for IT start-ups.

Not surprising is Johannesburg maintaining its position as the continent’s leading financial hub, given its strong domestic banking sector and status as the regional headquarters of many international banks. Casablanca, Lagos and Nairobi are consolidating their positions as regional banking hubs, while Port Louis (in Mauritius) is evolving as an offshore banking hub.

Choose a hub

Identifying a commercial center point or hub is the crucial first step for a business entering Africa, with many choosing to invest in a key city and expand into other territories thereafter. The JLL City Hierarchy in the report points to the following up and coming African cities:

Johannesburg and Cairo stand out as the most globally connected cities on the continent, with deep corporate bases, strong financial systems and relatively developed commercial real estate markets.
Lagos, Nairobi and Casablanca shore up demand in West, East and North Africa and an increasing number of corporates are basing their regional or continental HQs in these cities.
Meanwhile, Gaborone and Port Louis are emerging as specialized regional hubs for commodities trading and financial services, and feature among the group of JLL’s “rising star” cities.

The World Economic Forum on Africa 2015 takes place in Cape Town, South Africa from 3-5 June.
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Top international banks face US probe for alleged precious metals market fix - YouTube

Top international banks face U.S. probe for alleged precious metals market fix Money laundering for terrorists and drug cartels, rigging LIBOR to attack Cred...
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Balancing Inclusion, Integrity and Stability

Balancing Inclusion, Integrity and Stability | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it

A proportional approach to regulation that balances financial stability, integrity and inclusion is increasingly important.

Many members of AFI include financial inclusion as part of their primary mandate or consider it an important objective in expanding their financial sectors to enable inclusive growth and poverty reduction.

Global standards for financial integrity and stability provide guidance to regulators and policymakers to design and implement financial regulatory frameworks that minimize risk of abuse related to money laundering and the financing of terrorism, and ensure the safety and soundness of the financial system.

However, global standards can pose a challenge to developing and emerging countries which need to innovate and take advantage of new financial products and services to extend the reach of the financial system. Global standards that do not allow sufficient room for innovation, or which do not allow for proportionate application, can have unintended consequences with an adverse impact for financial inclusion. A further challenge can be over compliance, where national regulators and/or the private sector may adopt overly conservative approaches due to lack of understanding of how practically to apply the proportionality permitted by the global standards. As Bangko Sentral ng Pilipas (BSP) Governor Amando Tetangco Jr., has stated:

“While global standards are sufficient to allow proportionate application, they were originally not established with financial inclusion as a consideration; which can lead countries to adopt conservative approaches that limit innovation. The SSBs need to learn, in parallel with us, how to manage emerging and evolving risks that financial inclusion brings.”

In June 2014, AFI members created the Global Standards Proportionality Working Group (GSPWG) as a successor to the Financial Integrity Working Group (FINTWG), to provide a platform to review and discuss barriers to financial inclusion resulting from implementation of global standards with a view to identify and propose solutions that meet the challenge of balancing financial inclusion, integrity and stability to achieve the safety and soundness of the financial sector.

Over a four year period, the FINTWG was instrumental in documenting the related barriers and solutions, which were shared with the Financial Action Task Force (FATF) and the Basel Committee on Banking Supervision (BCBS). It has developed a Guideline Note for regulators to effectively implement risk-based frameworks to AML/CFT that aim at balancing integrity and inclusion. The GSPWG represents an expansion of the working group’s mandate to also consider issues related to the implementation of other global standards such as those set by the Basel Committee for Banking Supervision (BCBS), the International Association of Deposit Insurers (IADI), the International Association of Insurance Supervisors (IAIS), the Committee on Payment Settlement and Systems (CPSS) and the International Organization of Securities Commissions (IOSCO). The GSPWG will also have an important role to play in providing technical support to AFI’s Global Standards Sub-Committee (GSSC), established in April 2014 to facilitate a peer learning dialogue with the SSBs.

Click here for more information on the Global Standards Proportionality Working Group (GSPWG)

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Digital Financial Services

Digital Financial Services | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it

Digital financial services can expand the delivery of basic financial services to the poor through new technologies like mobile phones, electronic money and new channels such as retail agents.

Digital financial services (DFS) can expand the delivery of basic financial services to the poor through new technologies like mobile phones, electronic money and new channels such as retail agents. These channels can drastically drive down costs for customers and service providers, opening the door to remote and underserved populations. Regulators around the world have realized the tremendous role DFS can play for financial inclusion and seek to unlock this potential by creating enabling environments for DFS. In doing so, regulators seek to learn from policy and regulatory approaches that have been successfully tested and implemented in pioneering countries like Kenya, the Philippines, Pakistan, Tanzania and Peru. The AFI Mobile Financial Services Working Group (MFSWG) actively supports these peer-peer learning efforts and provides an ideal platform for exchanging knowledge and experiences among regulators.

While developing enabling environments for DFS, regulators face key policy and regulatory questions such as:

How to balance openness to experimentation and innovation with sufficient certainty about the legal framework?  How to regulate and safeguard the issuance of new digital payment instruments like e-money?What are AML/CFT concerns in relation to digital financial services and mobile-enabled cross border remittances?How should digital financial services be supervised?What are the implications of mandating interoperability and interconnection of digital financial services?How to supervise and regulate third-party agent networks?

Click here for information on AFI’s Digital Financial Services Working Group (DFSWG).

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Measuring Financial Inclusion

Measuring Financial Inclusion | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it

Measuring the quality of financial inclusion poses a number of challenges and addressing these is a priority of AFI.

More and more, policymakers are recognizing the importance of evidence-based policymaking and the critical role of data in the policymaking process, from design and implementation to monitoring and evaluation. With rigorous, objective and reliable data, policymakers can accurately diagnose the state of financial inclusion, set judicious targets, identify barriers, craft effective policies and monitor and assess the impacts of these policies.

AFI member countries are at various stages in the use of financial inclusion data, including conducting demand side surveys, consolidating supply side data, as well as implementing comprehensive monitoring frameworks and measuring qualitative outcomes, such as levels of consumer protection and financial capability.

In an effort to harmonize data across countries and provide an accessible tool for members who are collecting data for the first time, the Financial Inclusion Data Working Group (FIDWG) developed the AFI Core Set of Financial Inclusion Indicators on Access and Usage.

The second phase focuses on creating new and more extensive measurement tools, as well as expanding financial inclusion measurement across additional member countries. AFI member nations will also be developing Second Tier Indicators, which include measurement and tools for barriers to access and usage, and the quality dimension of financial inclusion. Efforts will also focus on the development of more sophisticated data analysis tools. This will help to improve the harmonization of data and deepen policymakers’ understanding of financial inclusion data and how to apply it to their countries’ particular policies.

Click here for information on AFI’s Financial Inclusion Data Working Group (FIDWG).

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Other Financial Inclusion Policies

Other Financial Inclusion Policies | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it
Other Financial Inclusion Policies

Other areas AFI aims to provide support to in order to constructively strengthen financial inclusion policy formulation include micro-credit, micro-savings and micro-insurance.

AFI members agree that access to credit, savings and other financial services like insurance are critical components of financial inclusion and AFI continues to explore member experiences in regulating these services in order to share policy practices.

Broadening the number of financial players that can support a range of these services is also seen as a more effective way to provide greater access to these products and services. Supervision and regulation of non-bank financial institutions and their role in providing these services, as well as the role of deposit insurance, are an important part of policy formulation in this area.
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Shelby’s financial reforms could face problems on the floor - Freedom's Floodgates

Shelby’s financial reforms could face problems on the floor - Freedom's Floodgates | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it
The Hill is reporting that the Senate Banking Committee's more moderate Democrats intend to vote against the financial services reform package put together by Chairman Richard Shelby, R-Ala., at this morning's mark-up session.
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Women and Enterprises: Driving Financial Inclusion and Investment Returns | UNCDF

Women and Enterprises: Driving Financial Inclusion and Investment Returns | UNCDF | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it
Worldwide, 1.1 billion women are still excluded from the formal financial system. How can we help them? http://t.co/OEEI2iteaE v @UNCDF
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Ensuring financial inclusion for smallholder farmers

Ensuring financial inclusion for smallholder farmers | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it
In the framework of the 2015 Global Forum on Development, which focused on “Financing sustainable development”, the OECD Development Centre, the United Nations Capital Development Fund (UNCDF) and the Better than Cash Alliance have developed a series of articles exploring the key issues and dimensions of financial inclusion. Improving citizens’ access to financing is key to support more inclusive social and economic development. Today’s post from Kameshnee Naidoo of UNCDF highlights the challenges of ensuring financial inclusion for smallholder farmers.

Joacquim is a subsistence farmer from Etatara in Mozambique. At 46 years, he is his family’s sole breadwinner, responsible for supporting his wife and three orphaned grandchildren. He lives in a traditional house, which he is unable to use as collateral and grows maize, sorghum, cassava and beans. They consume a lot of the produce themselves, and what is not consumed is sold. Joacquim earns $300-500 per month depending on the season and his produce.

In the attempt to understand the real livelihoods of lower-income individuals and households in markets such as Mozambique, the lack of data and field-based insights are challenging. UNCDF’s Making Access to Financial Services Possible (MAP) project, for instance, seeks to place demand-side analysis at the centre of the research process to focus the minds of multiple stakeholders on the end consumer. Better provision of appropriate financial services is an ancillary tool to wider development goals of enabling more sustainable livelihoods for low-income populations.

Millions of smallholder farmers like Joacquim live in or close to poverty and rely on agriculture for their livelihoods. Agriculture is fundamental to poverty reduction, driving economic transformation and ensuring growth includes the poor. Pathways out of poverty – whether through farming, employment, non-farm processing and trade or migration – are all heavily reliant on agriculture. As stressed in a report to the G20 co-ordinated by OECD and FAO, improving agricultural productivity — while conserving and enhancing natural resources — is an essential requirement for farmers to increase global food supplies on a sustainable basis and enhance their livelihoods. Over the longer term, increasing agricultural productivity plays an even greater role in economic development by enabling economic transformation through a new green revolution.

For agriculture to work better and improve the livelihoods of the rural poor, however, financial services need to work better in helping the poor to diversify their source of livelihoods and reduce hunger, become more resilient to periodic shocks, and prevent them from falling into poverty traps. The rural economy requires a wide range of financial services and products, and no single type of financial institution is capable of efficiently providing such a range. Microfinance, for example, can help to meet the short-term needs of farmers and other low-income residents and help to finance microbusinesses but it is not so suitable for larger businesses or for the accumulation of capital and innovations to raise productivity.

The OECD’s Multi-dimensional Review of Myanmar found that of all the segments of the country’s economy, the rural sector is the most underserved by the formal financial system. Only about 2.5% of total loans go to the rural sector, even though it accounts for 30% of GDP and two-thirds of employment. The rural population has considerably less access to formal financial services than the population in urban areas and some groups, such as landless farmers, are effectively cut off from such services.

The current rural financial system is unlikely to be able to support the broader development of the rural economy in Myanmar, particularly the improvements in productivity and the creation of non-farm job opportunities that will be necessary to allow the rural population to share in rising living standards and to avoid a disruptive exodus from rural to urban areas.

Apart from the basic loan products, other financial products and services have been quite limited. For instance, remittance services are particularly important to Myanmar’s rural sector, given that an estimated 2-5 million of its citizens are working in other (mainly ASEAN) countries and annually send a substantial amount of funds back to their families.

Finance is also needed for the agricultural investment that is a major catalyst for job creation, higher incomes and increased productivity across the economy as a whole. Financing agriculture and rural development more broadly, however, is complex. All of the challenges that hinder financial outreach in regular markets are larger in a rural context. Rural populations are poor, sparsely distributed, poorly literate and mostly engaged in informal activities. Data from the FinScope surveys and the MAP diagnostics indicate that agricultural activity — mostly smallholder farming — has low returns and is subject to high risks. Information failures like moral hazard, adverse selection, poor enforcement and danger of exploitation all exist on a large scale. For suppliers of financial services, the cost of operating in rural areas is often extremely high which, when combined with the low and risky returns available, leads to a large under-supply of financial services.

If financial services are to work better for rural and agricultural populations, they need to be based on an understanding of the needs of the users, which can be very different to those of urban populations. But financial service providers, governments and donors do not have a good understanding of the financial behaviour, usage and needs of rural populations and this restricts the effectiveness of rural outreach.

On the supply side, an increasing number of traditional and non-traditional financial service providers are innovating in the agricultural space, driven by a combination of declining profitability in more advanced markets and the huge potential offered by the unbanked millions in rural areas. Innovation is taking place in delivery models led by technology and building alliances between those who have assets and those who have low cost outreach; in risk management enabled by big data and leveraging existing relationships within the value chain (buyers and sellers, farmers’ associations, co-ops); in products driven by a better understanding of what farmers need, matching tenor and interest and repayment schedules to agricultural cash flows and addressing agricultural development with finance.

If the goal is to alter the dynamics of markets so that they work more effectively for the poor and economic transformation, we need to recognise the interaction of these market systems. In this regard, understanding how agriculture shapes the demand for financial services and how the rural context in which it takes place affects the costs, risks and returns to supplying financial services is central. A key component of the MAP diagnostic is to build a target market profile based on the main income generating activities of consumers, and their financial services access, usage and needs. The analysis is informed by the context of the country and ultimately seeks to meet the policy objectives of financial inclusion as a tool to improve welfare and poverty alleviation. As a large number of the countries in which the MAP diagnostics have been undertaken are LDC’s reliant on agriculture, it is able to present a more complete picture of the nature of demand and usage of financial services and potentially inform better ways of serving farmers ‘s needs.

Useful Links

OECD work on financial education

Report of the G20 on Sustainable Agricultural Productivity Growth and Bridging the Gap for Small-Family Farms

World Bank Financial Inclusion Data
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A Big Step Forward for Bolstering Financial Inclusion

A Big Step Forward for Bolstering Financial Inclusion | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it
By David Marston, Era Dabla-Norris, and D. Filiz Unsal (version in Español) Economists are paying increasing attention to the link between financial inclusion—greater availability of and access to ...
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10 Insights on Financial Inclusion from the 2014 Global Findex

10 Insights on Financial Inclusion from the 2014 Global Findex | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it
06 May 2015
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How many adults in the world have a bank account? How do people save, borrow, and manage financial risk? How is mobile money shaking up the financial inclusion world? These are the sorts of questions we can answer with the newly released 2014 Global Findex. The database covers 800 indicators and draws from survey data covering almost 150,000 people in 143 economies. We present 10 takeaways we think you should know:

1. Account ownership is increasing almost everywhere in the world. 700 million adults (above 15 years old) worldwide became account holders between 2011 and 2014 (accounting for a population growth of 200 million). Worldwide, account ownership increased to 62%in 2014, up from 51% three years ago (including one percent of adults that use only a mobile money account and do not have an account at a financial institution). In high-income OECD economies, account ownership is almost universal, at 94%; in developing economies, 54% of adults have an account.

2. The gap between rich and poor in account ownership is shrinking – but still persists. In developing economies, 46% of adults living in the poorest 40% of households have an account – up from 29% in 2011. Meanwhile, 60% of adults living in the richest 60% of households have an account. A significant gap still separates these groups, but it has decreased by six percentage points since 2011.

3. The gender gap in account ownership isn’t significantly narrowing. In every region, the number of women with an account has increased compared to 2011. Yet, the gender gap hasn’t budged. In developing countries, 59% of men have an account—compared to 50% of women.  The gap in account ownership between men and women is unchanged from 2011. That being said, the extent of the gender gap does vary across regions; from four percentage points in East Asia and the Pacific up to 18 percentage points in South Asia.


Photo Credit: Brett Davies, 2014 CGAP Photo Contest. 

4. Mobile money is transforming Sub-Saharan Africa’s financial inclusion landscape. Sub-Saharan Africa is the global epicenter of mobile money accounts. Worldwide, just two percent of adults use a mobile money account, compared to 12% in Sub-Saharan Africa. There are only 13 countries in the world where more than 10% or more of adults have a mobile money account, and Sub-Saharan Africa is home to all of them. East Africa – where 20% of adults have a mobile money account, and 10% have a mobile money account only (no bank account) – leads the continent. Digital payments made through these accounts have benefitted groups that were long excluded from the formal financial system, such as farmers.

5. In a few countries, mobile money accounts are more common than financial institution accounts. Mobile money accounts are still pretty rare outside of Sub-Saharan Africa, but in five Sub-Saharan African countries -- Cote d’Ivoire, Somalia, Tanzania, Uganda, and Zimbabwe -- more adults have a mobile money account than an account at a financial institution. Kenya has the world’s highest share, at 58 percent, followed by Somalia, Tanzania, and Uganda, with about 35% each.

6. 2 billion adults are still unbanked – most in East and South Asia (including India, China and the Pacific). Thanks in no small part to new technologies, bold government reforms, and ambitious business models, the number of unbanked adults has dropped from 2.5 billion in 2011.

Figure: Asia and Africa are home to most of the world’s unbanked
Adults without an account by region (%), 2014

8. 1.3 billion account-owning adults still use cash to pay utility bills. In addition to account ownership, the 2014 Global Findex measures the ways people use their accounts to make and receive payments. For example, in developing countries, 56% of adults make utility payments – but almost 90%use cash to do so. 

7. Hundreds of millions of people could join the formal financial system if governments and businesses made payments into accounts instead of in cash. The Global Findex data point to several big opportunities to help the unbanked get access to financial services. Globally, shifting government wages and transfer payments from cash into accounts could increase the number of adults with an account by up to 160 million; doing the same for private-sector wages could increase the number by up to 280 million.

9. In developing economies, most people who save money don’t use an account to do so. In high-income OECD countries, about 70% of savers keep their savings at a bank or another financial institution, compared to about only 40% of savers in developing economies. A common alternative in developing economies is to save using a person outside the family or a semiformal savings club, including rotating savings and credit associations (ROSCAs). ROSCAs operate by pooling weekly member deposits, which are generally kept in some community member’s home, and disbursing the entire sum to a different member each week. Such practices are especially common in Sub-Saharan Africa, where 40% of savers use semiformal methods. About 46%of savers exclusively use other ways of saving – such as stuffing cash under the mattress, or saving in the form of jewelry, livestock, or real estate.

10. Almost 75% of adults in developing countries report they could come up with money for an emergency within a month. The 2014 Global Findex tries to better understand how people around the world would respond to unexpected expenses equaling about one-twentieth of per capita income [$2,600 in the US].  About 1.2 billion adults (28% of adults) in developing countries report they would use their savings in case of an emergency. Yet 56% of these adults do not save at a financial institution. Keeping these emergency reserves in cash presents a real risk that the money won’t be there when needed.

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Issuers believe shift to chip cards will be almost complete by 2017

Issuers believe shift to chip cards will be almost complete by 2017 | Global Partnership for Financial Inclusion for Development, Banks, IFI's, Financial Reforms | Scoop.it
Eight financial institutions, representing approximately 50 percent of the total U.S.
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